Tom Melhuish 4 min read

What is the VAT on your business water bill?

Nearly all businesses use water every day and receive water bills regularly, but have you ever considered if you’re paying VAT on your business water bill?

In this article, we have a look into what VAT is, if there is VAT on water bills, and how you can ensure you are paying the correct rate of VAT.

What is VAT?

VAT is a value-added tax. VAT is a consumption tax that is placed on a product at every stage of the supply chain where value is added. The amount of VAT that a business pays is on the sales price of their product, less any of the costs of materials used in the product that has already been taxed.

Is there VAT on your business water bill?

VAT on your business water bill is usually applied to businesses involved in engineering, manufacturing, and construction.  These businesses use water as a direct input in their production making it taxable.

What types of businesses are charged VAT on their water bills?

The types of businesses that are charged VAT on their water bills are businesses that fall into the 1-5 divisions of the Standard Industry Classifications.

The top industries that fall into this category are:

  • Utilities
  • Construction
  • Chemical Production
  • Food Production
  • Mining
  • Textile Production

How much is VAT on my business water bill?

The VAT for all industrial companies listed above is set at 20%. It’s charged at the standard rate. Businesses that are charged VAT on their business water bills will be able to recover the VAT charged by your water supplier as input VAT through their periodic VAT returns.

Will my business be charged VAT?

No, your business will not be charged VAT on your water bills, unless you are a business that falls into the industrial business sector. For example, if your business is involved in engineering, manufacturing, and construction. In VAT jargon the supply of water and wastewater services is a zero-rated supply.

If you think your supplier is incorrectly charging you VAT we recommend that you contact the customer services department of your supplier.

How can I switch my business water supplier?

Here at AquaSwitch, we can assist you with switching your business water bills with ease. The first step of the process is to compare your current water tariffs to those being offered by alternative providers.

What are the benefits of switching my business water supply?

  • Savings: By switching supplier, you can now save up to 20% on your business water bills.
  • Improved Customer Service: Benefit from improved customer experience, tailored services, and simplified bills.
  • Efficiency: Find a supplier that will help you create a more water-efficient business.

For a detailed understanding of what’s involved in switching water suppliers please refer to our guide here.